HEN HANDED a long and turgidly Wwritten memorandum on a worthy if uninspiring subject, once famously remarked: “This paper by its very length defends itself against the risk of being read.” At the launch of his brainchild Commission, UK Prime Minister indicated the desperation of Africa’s plight: “Africa is the only continent to have grown poorer in the last 25 years. Its share of world trade has halved in a generation and it receives less than 1% of direct foreign investment… Africa, he said, “risks being left even further behind.” Indeed, the Report of the Commission for Africa – all 461 pages of it – is a worthy and inspiring subject to those concerned about The Commission for Africa More than just another paperweight? GREG MILLS

MAELSTROM IN DOWNTOWN LAGOS, biggest city in , Africa’s most populous country SOUTH PHOTOGRAPHS Africa’s plight. A shorter, ‘kindergarten’ version has written that while increased aid does carry would have perhaps been both more useful and risks (such as the crowding out of exports on more widely read. While comprehensive, the which longer-term growth depends, and that aid Commission’s Report is as hastily compiled as will encourage corruption, bad policy and waste), expected from a document assembled in just “the option”, he says, “of doing nothing is “ALWAYS POLITICALLY AWARE of its African seven months to meet the deadline of the 5 May worse. Greater aid does carry risks. But its links, Jacques Chirac’s 2005 UK General Election. absence brings dreadful certainties. Let us manage government has taken a Even so, the Report does braid concerns about the risks, not live with the certainties.” slightly different line in finding sources of new security, trade and external assistance with the More aid along with improved governance is also development money. overall imperative of reducing poverty in Africa the core tenet of Washington’s Millennium Challenge The Chirac plan begins from the basis that the and at the same time arresting the continent’s Account (MCA) announced earlier in March 2002. $50 billion required to relative global economic marginalisation. But does Under the terms of the MCA, the US will increase its double global aid flows is a small sum in this document advance the cause of Africa more core assistance to developing countries by 50% over comparison to those than, as sceptics have suggested, just promoting three years, resulting in a $5 billion annual increase generated by the global economy.” the prime minister’s own political profile and over current levels by 2006. agenda, by offering on its release on 11 March Always politically aware of its African links, 2005 a slice of moral high ground between the Jacques Chirac’s government has taken a slightly war in Iraq and a domestic election? Are there different line in finding sources of new development aspects which might be usefully seized upon to money. The Chirac plan begins from the basis that promote business in Africa, ultimately the only the $50 billion required to double global aid flows sustainable means to reducing poverty on the is a small sum in comparison to those generated continent? by the global economy. His government’s Landau The launch of the Commission’s Report followed Commission recommends that new funds be the release of a United Nations’ study conducted generated by international taxes or levies on a by University of Columbia professor (and UN variety of cross-border activities, including a adviser) Jeffrey Sachs that advocates a two-decade fraction of international financial transactions push of foreign aid to Africa in identifying five such as currency sales, the flows of foreign structural deficits that form the “poverty trap”: capital moving to tax or bank havens, and a more  the continent’s high transport costs and small ambitious plan to tax aviation and shipping fuel. market size; Again, this pivots development and prosperity on  its low-productivity agriculture; the flow of more money to Africa.  high disease burden; The Commission for Africa Report similarly  long history of malign external interventions; and, appeals for more aid (an extra $25 billion per  very slow diffusion of technology from abroad. year by 2010), better governance, fairer trade What is needed to exit the “trap”, Sachs and less debt. Its solutions reflect UK Chancellor argues, is a “big push” in seven areas: ’s desire to establish an International © GETTY IMAGES/TOUCHLINE PHOTO  raising rural productivity; Finance Facility (IFF) bundling together promises  tackling the disease burden; of future aid from rich countries to launch a bond  making primary education universal and to increase funds to fight global poverty. The IFF expanding secondary education; seeks an additional $50 billion a year in aid by  financing urban development; 2015 for the world's poorest countries to meet  mobilising science and technology; the internationally agreed UN Millennium  gender equality; and, Development Goals.  regional integration. The Commission’s Report calls for a new kind In supporting such a radical approach, Martin of partnership with Africa “based on mutual Wolf, the Financial Times’ redoubtable columnist, respect and solidarity”. It lists those Western

12 OPTIMA JUNE 2005 policies that damage Africa, including the unsurprising that the Commission’s findings have subsidising of its farmers that gives them an unfair come under fire. advantage against African ones, the sale of arms There are four essential criticisms: First, that into war zones, insistence on the repayment of the Commission’s Report offers little new in the debts, and the warehousing and laundering of way of prescriptions in emphasising the importance stolen African state funds in Western banks. It of governance and aid for African recovery. The also addresses the issue of how to make aid World Bank has been saying this for more than more effective, although responsibility is divided half a decade. Second, that it not only relies on between donors – the Commission calls for aid as a catalyst for growth, but that it anticipates “a radical change in the way donors behave and that more money will lead to better governance deliver assistance” – and African countries, which when the evidence from Africa over the last four are urged to focus on improved governance. decades suggests the opposite. Third, that the list In that it focuses not on what Africa can do of recommendations reads ‘left to right’ only: that for itself but rather the West for Africa, it is the G8 and other international institutions and

IN STEP? US President George W Bush and South Africa’s President Thabo Mbeki. “Likely the most important role the West and other external actors can play in improving the continent’s economic performance and thus African recovery itself and, indeed, in securing their own interests, is in strengthening accountability and transparency, creating or reinforcing the often ‘missing link’ between African government and citizenry.”

© GETTY IMAGES/TOUCHLINE PHOTO actors should do a range of things to promote the critical determinant is the environment into continental recovery, while in fact recovery is which aid is inserted. This does not mean that aid instead principally incumbent on what African does not have its part. But it should not go from countries do. In simple terms, that the Commission’s government-to-government. It should be used to report should read more ‘right to left’. Fourth, and find targeted ways to promote business, and it perhaps most interestingly, is the criticism from should be used to alleviate poverty. Mechanisms Africans that the Commission is not only superfluous outside of government should be used to deliver but that it competes against their own plan, the it, and the terms of delivery should be much more New Partnership for Africa’s Development (NEPAD). conditional. Not only is the Commission’s Report a separate Rather than assessing how much aid is necessary document, but it is the document being presented for Africa to develop – the overwhelming focus of to the G8 by Blair at the Gleneagles summit the Africa Commission Report – a more important this July. question that Africa should be asking itself concerns Is the Commission for Africa worth more than what sort of strategies might permit development its weight in paper – or will it become just another dusty paperweight? The African aid record suggests that more expenditure will not necessarily offer a catalyst for recovery but might, instead, divert the focus from what African countries must do at home to encourage business. Aid undercuts the necessity for African states to create long-term domestic CAMPAIGNING FOR financial tools such as the issuing of bonds to ROBERT MUGABE in the fund their development. In so doing, it leaves Zimbabwean election in 2005. “Africa’s them at the mercy of short-term, politically-inspired stagnation will ultimately aid surges and with weak domestic financial not hinge on the favour institutions. ‘Aid’, as Geoffrey Onegi-Obel a senior or neglect of others. It will depend on leadership adviser to Ugandan President Yoweri Museveni and governance. And as argues, ‘shorts African economies.’ The calls for long as those purporting to be a new generation sweeping debt relief have an equally pernicious of African democrats effect – adding a premium to future African excuse and coddle their neighbours and blame borrowing for development in international markets. the West for their woes, Aid is also a very corrupting influence on aid flows will be as ineffective as the African development thinking, cementing a certain $1 trillion that came political-cultural mindset prevalent in the West – before it.” of a basket-case Africa requiring unprecedented Far right: DISPLACED largesse as the only development solution. The COMMUNITIES crowd a SOUTH PHOTOGRAPHS Africa Commission dresses up a lot of old ideas makeshift refugee camp. Yet “the notion that and failed practices in new packaging. At best more aid will develop these are irrelevant solutions; at worst, they are Africa also defies the historical record. History damaging by replicating jaded, pernicious practices has shown that the and cultural stereotypes. volume of aid flows to Africa is not the reason The notion that more aid will develop Africa for a continued lack of also defies the historical record. History has development; the critical determinant is the shown that the volume of aid flows to Africa is environment into which not the reason for a continued lack of development; aid is inserted.”

14 OPTIMA JUNE 2005 without aid. No rather than more aid should be popular welfare is the most successful and rapid the goal. For this positive future, African leadership route out of poverty. Aid and American purchasing will have to develop a policy consensus at home power were important in this East Asian process, rather than in Western capitals. An increase in but were at most catalytic rather than the core unconditional aid flows is neither going to improve reason for continued success. Domestic governance nor inspire the structuring of domestic investment in skills and infrastructure from this financial institutions and mechanisms. boom sustained Asia’s upward growth trajectory. Fundamentally, to engineer its recovery, Africa A key problem identified for Africa is that the needs to learn from the success of the new continent receives less than 5% of the $200 billion globalisers, most of which are in Asia. It is a flowing annually in private-sector investment into lesson of rapid economic growth with political developing countries, and just a fraction of the stability. The Asian development experience also more than $1 trillion in the annual worldwide suggests that bottom-up development through foreign direct investment (FDI) sum. Additionally, industrialisation guided by leadership intent on much of the African slice goes into enclave oil

© GETTY IMAGES/TOUCHLINE PHOTO economies with little consequent benefit to the average African. This is compounded by low domestic savings rates (under 15%) and the high levels of African capital exports, with around 40% of African wealth held offshore, a higher percentage than any other region. Thus, in Africa, much is hinged on the need for improved rates of FDI. This is desirable in bridging the gap between current rates of African domestic savings (around 13%) and the rate of investment to GDP required to achieve growth in the 7%-8% margins. But this risks overlooking IN THE VIEW of leading why the volume of domestic investment has economist and UN been so small in Africa, all the more important adviser Jeffrey Sachs, low-productivity since foreign investors have a habit of following agriculture and its high domestic ones. The local lead is all the more disease burden are among the structural important since they should know more about deficits that help form the continent. Africa’s “poverty trap” – while mobilising science One reason for a lack of domestic investment and technology is a key is because this money in Africa is sidetracked into area where a “big push” is needed in order to exit stocks rather than more permanent buildings and the “trap” factories. Africans prefer, for reasons of political SOUTH PHOTOGRAPHS threat and the risk of corruption, to make investments in more liquid assets which can be more easily realised. This partly explains the to go by, will inevitably rest on the mix of better relatively buoyant Zimbabwean and other minor skills and more governance capacity, requiring African stockmarkets. Yet in most of the 18 African more money and a transfer of skills and technology. countries with stockmarkets, economic growth and Here the international community can assist, at investment levels were lower in the 1990s than least partly. The Africa Commission identified a the 1980s. Most likely, as Seeraj Mohamed has number of factors influencing the African argued, “African governments would have gone a investment climate, including property rights, long way towards improving the economic commercial justice in enforcing contracts, weak environment for businesses if they had instead institutions, macro-economic policy, over-regulation, invested their resources and energy in improving political instability and conflict, the predictability bank lending and debt markets in their countries.” and transparency of taxation, poor service delivery, Risks, real or perceived, are thus part of the weak infrastructure and corruption. development problem. Ironically, one reason for Simple ‘growth accounting’ illustrates the the perpetuation of risk resides in the preferred diversionary effect of corruption and instability emphasis of African leadership on solidarity rather and a lack of confidence in African governance than differentiation between states. Moreover, and leadership. There is little reason why, with a this is all the more important since it is the minimum of stability and investment, African individual policies and performance of African countries should not be able to achieve much countries – rather than continental visions – higher rates of growth. Most should keep pace what will assist them most in delivering growth. with population rates of increase, in the region of Indeed, African growth, if the experience of 2.5% per annum, especially as they are mostly East Asia over the past four decades is anything coming off a low base. Cellphone revenues might

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contribute a further 1.5% to GDP alone, the impact Or as one senior World Bank official noted recently, of improved electricity supply on the costs of “The biggest African challenge is the total doing business another percentile, and steadily responsibility of some of its leaders. Many know improving infrastructure including railways and how to talk-the-talk to foreigners, but do things ports and particularly roads another one point. differently at home.” The Commission for Africa Already, without major new projects, many indicates, if nothing else, how polished that African countries could achieve 6%+ growth patter has become. But it risks much more than rates, and even higher with improved rates of Tony Blair’s reputation. Without better governance, domestic saving and systems of lending. And the Commission’s proposals could perversely affect while the exactitude of this accounting is debatable, only a tsunami of aid. just a slight uptick in African economic activity Africa’s development is thus going to be should produce higher rates of growth than dependent more on bootstraps than aid, and on currently since the starting base is so low. internal rather than external strategies. To do Africa’s stagnation will ultimately not hinge on so, African leadership has to devote energy to the favour or neglect of others. It will depend on promoting business, not their plight. Likely the leadership and governance. And as long as those most important role the West and other external purporting to be a new generation of African actors can play in improving the continent’s THE AUTHOR democrats excuse and coddle their neighbours economic performance and thus African recovery Dr Greg Mills directs The Brenthurst Foundation, and blame the West for their woes, aid flows will itself and, indeed, in securing their own interests, dedicated to improving be as ineffective as the $1 trillion that came is in strengthening accountability and transparency, African economic before it. Pledges and promises can never equal creating or reinforcing the often ‘missing link’ performance [email protected] the value of the reality of enlightened governance. between African government and citizenry.

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